The speed and scale of the advances we’re seeing in tech today are almost incomprehensible. What was once science fiction is now mainstream. And in terms of “Tech For Good”, there’s a huge amount going on in areas such as water sanitation, waste reduction, medicine and health, education, energy creation and storage, etc.
Fintech startups with a proethical edge may seem less prominent. But many started up in the wake of the 2008 financial crisis, decry traditional City values, are cause-led, founded on a desire to transform the financial sector for the better.
But are fintechs ‘for good’ if they’re also ‘for profit’?
Maybe it’s twenty-something idealism or millennial naivety but part of the reason I became interested in fintech is because I believe it can.
My introduction came through Transferwise and Xendpay – money transfer alternatives seeking to end remittance fee rip-offs by creating fairer, cheaper, more transparent options for people sending money abroad. Whether they’ve succeeded remains to be seen (as Taavet Hinrikus said, there’s much more to be done) but through new technology and disruptive business models, they tell a story about a future where money tackles problems rather than creates them.
Of course, surface narratives are all well and good. Any company can have a pretty bit of marketing. But there remain a swathe of startups focussed on finance and seemingly developing proethical products.
An example of this is fintech for the “unbanked”.
Finance for the ‘unbanked’ is a clear form of fintech ‘for good’.
Sure there’s ideas like blockchain – dubbed to tackle issues from sustainable fishing to slavery to financial inequality using the digital ledger technology behind bitcoin (also see ALICE – a Nominet investment that “combines social impact investment and blockchain technology to bring a new kind of transparency and trust to the charity sector”) – but ‘unbanked’ holds similar buzzword status.
In fact, Chris Skinner wrote a blog on The Finanser highlighting why ‘unbanked’ is such a sexy word for investors. He accentuated the ‘market potential and effect on global wellbeing’ of fintech products for the unbanked, especially e-wallets like M-Pesa, bKash and Nettcash. Supported by internationally renown charities, such innovations are helping the very poorest by giving them mobile access to financial services.
A study by McKinsey further investigated the impact financial inclusion through mobile services might bring to developing nations in terms of reducing costs or boosting economic growth. With two billion people classed as unbanked, their results showed that digital finance could add $3.7 trillion dollars to the GDP of emerging markets economies, financially including 1.6 billion more people, creating 95 million more jobs, and opening up $2.1 trillion in credit to individuals and MSMEs.
Fintech in developing nations is therefore pivotal in doing global ‘good’. But the ‘unbanked’ aren’t just in faraway places. In the US there’s an estimated 90 million unbanked people (28% of the population). According to the Financial Inclusion Commission, in the UK the figure stands around 12% of the population.
Research into culturally relevant products is key. But thanks to the rise in smart phone access there is a profitable business opportunity there – for pockets and people.
Underpinning all of this is the idea of ‘democratisation’.
From investment management tools like Nutmeg to crowdfunders like Downing Crowd or peer-to-peer lenders like Funding Circle – there are many startups boosting access to finance for those who aren’t traditionally recognised as customers for these products (ie. wealthy City types with second-homes in France).
Epitomising the focus on democratisation are startups like Monese. Monese is sometimes called the ‘migrant bank account’. Its UK banking app ‘enables immigrants and expats, who might otherwise find it hard to open a bank account outside of their home country, to access core banking services‘. Whilst not a full bank account, it is able to navigate the hurdles often faced by newcomers to a country such as residency restrictions and currency transfers.
Mobile-first banks like Starling (#shoutout) and personal finance assistants like Money Dashboard are similarly building tools to help with day-to-day spending. It’s more than mere money management. It’s about boosting everyone’s financial wellbeing.
Big data plays a key role here. Shining light on customer behaviours, mobile money apps and products are able to provide insights to boost financial health. For instance, initiatives like the Money and Mental Health Policy Institute should be able to harness data to aid those in mental distress. They could identify the spending habits of someone with a particular condition and set up safety nets so they don’t overspend or lose financial control.
And that’s before we even get to apps that more overtly aim to help us do ‘good’ with our money.
Paychecks are nice too. Once in a while. https://t.co/WhcRwNtoUL
— Shafi Musaddique (@ShafLdn) October 6, 2016
Despite what the Guardian says about millennials, I’m not driven by meaning before money. And I don’t think many people my age are – pay checks are good too. But from where I stand there’s no reason why money can’t be meaningful and mindful.
There are now many products out there aimed at explicitly enabling us to put our money toward certain causes, situations, and needs. From Pixie (a payment & discovery app designed for independent businesses) to Willow (an app that helps manage costs after a bereavement), and the ever growing number of roboadvisors helping align values with investments, ISAs, pensions and more.
I also suspect apps like Bud – clever but simple – will be more effective in helping people put their money where it matters. Their financial assistant platform means anyone can take charge of their data and use it to make informed financial decisions. Whether it’s bank accounts based on social, green or impact investments, Bud could help align your personal values with ideal products.
Available to everyone with a mobile, such apps can be as specific or as broad as desired, and they alleviate pressure points and help us direct money towards the future we want.
With so much going on in fintech to change the way we use our money, the way it acts, and even our mindsets and approaches to where we spend, save, invest, and so on – there’s no doubt in my mind that fintech can work for good.
I don’t believe this positivity towards fintech for good is just because I’m a millennial either. Yes, we’re the worst paid generation, the savviest, and best educated. But the narrative around money and business is changing for all people of all ages (think COP21). The zeitgeist is more socially conscious and environmentally aware than ever before.
Because fintech enables more and more people access to financial tools, more and more of us can put money towards things we care about. We have the opportunity to be the change – and all we have to do is swipe right.
Involved in #fintechforgood or want to know more?
I’m hoping to be writing a lot more about this in the future and I’d love to hear from anyone involved in the space.
— Harriet… (@TheScribbleBug) July 21, 2016
For other resources:
My first stop in the morning for ‘good’ news is almost always these:
Good With Money – a website and blog dedicated to helping you become good with money while doing good with money too.
Collectively – A story platform celebrating people who are doing amazing things that help society and the environment thrive.
GOOD Magazine – A global media brand and social impact company with a brilliant newsletter and magazine. They help brands and people become forces for good.
Disrupts / The Fintech Times – A recent addition to the fintech and tech space, they’ve already done two editions dedicated to new startups in the ‘for good’ catagory and are generally awesome for startup news.
Also check out Duena Blomstrom’s amazing blog on emotional banking – especially this one on how big banks with household names are doing emotional marketing – for more about how banks in particular need to refocus and put the customer first.